We are independent & ad-supported. We may earn a commission for purchases made through our links.

Advertiser Disclosure

Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.

How We Make Money

We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently from our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is an Equitable Charge?

Malcolm Tatum
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

An equitable charge is an arrangement in which a debtor chooses to use an asset as security for some type of financial obligation, such as a debt. While the debtor retains control and use of the asset, the creditor has a claim on that asset in the event that a default on the obligation should take place. Typically with this arrangement, the creditor has the right to make use of the judicial process to petition for and secure ownership of the asset as a means of settling the defaulted debt.

The creation of an equitable charge begins with the offer of some sort of property by the owner as security for a debt that is owed to a creditor. Assuming that the property is of equal or greater value than the amount owed, the creditor will usually accept this pledge of security. In exchange for that acceptance, the debtor covenants that in the event of non-payment of the outstanding debt, the creditor has the right to gain control of that asset in order to settle the debt.

Depending on laws that prevail in the jurisdiction involved, an equitable charge will usually involve making an appeal to a court. The court will assess the merits of the case and render a judgment. At times, the court may determine to simply transfer ownership of the pledged security to the creditor and consider the matter settled. At other times, the court may choose to order the sale of the asset, with the proceeds from the sale going to repay the creditor and cover court costs. In the event any funds remain after settling the obligation, those may be tendered to the debtor, who is also the defendant in the court action.

Arranging an equitable charge is often a way of allowing the debtor to receive more attractive financing arrangements from a creditor. Pledging some sort of asset as security on the transaction helps to alleviate some of the risk that the creditor takes on by extending a loan or other form of credit to the debtor. Since the pledge is only enforced in the amount of default, the debtor is able to use the asset in any way that does not impact its value. In addition, the debtor cannot sell the asset for the duration of the debt obligation without the express permission of the creditor. Once the debt is repaid in full, any claims that the creditor has in regards to the equitable charge are rendered null and void, and the debtor is free to do whatever he or she desires with that asset.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum , Writer
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.

Discussion Comments

Malcolm Tatum

Malcolm Tatum


Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Read more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.